Stocks

Nikkei sheds gains as slide in oil prices pulls down energy shares

Reuters Tokyo | Updated on May 28, 2018 Published on May 28, 2018

The benchmark Nikkei share average was nearly flat at 22,445.27 points by the mid-morning break, erasing gains of 0.4 per cent earlier in the session.

Trading subdued, with US, UK markets closed for holidays

Japanese shares gave up initial gains on Monday as a further slide in oil prices pulled down energy-related stocks, offsetting renewed hopes for a US-North Korea summit next month.

The benchmark Nikkei share average was nearly flat at 22,445.27 points by the mid-morning break, erasing gains of 0.4 per cent earlier in the session. The broader Topix slipped 0.2 per cent to 1,768.21, with the JPX-Nikkei Index 400 edged down 0.1 per cent to 15,641.00.

As oil prices extended their sharp declines on Monday, oil refinery and exploration companies were hit hard, with Inpex, Japex and JXTG all shedding between 3.6 and 4.2 per cent each. But lower fuel prices benefited the air transportation sector index, which advanced 1.7 per cent.

Although the Nikkei had opened higher on optimism that the historic summit meeting between United States and North Korea may be back on track, most investors were cautious and kept to the sidelines.

“Although there are some new developments in geopolitics -- the revived talks for US-North Korean summit and Italian president's decision to defend the euro -- these are reasons 'not to sell', rather than 'to buy,'” said Yuya Fukue, trader at Rheos Capital Works.

President Donald Trump had said on Sunday a US team had arrived in North Korea to prepare for a proposed summit between him and North Korean leader Kim Jong Un, which Trump pulled out of last week before reconsidering.

Developments in Italy were also giving investors pause. While the country's president rejected a eurosceptic pick for the key economy ministry, his decision led to a collapse in efforts to form a coalition government, triggering a possible constitutional crisis and opening the prospect of fresh elections.

Published on May 28, 2018
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